Former Bureau of Prisons Employee Agrees to Pay $50,000 to Resolve Anti-Kickback Act Allegations

Cary Hudson, a former financial administrator for the U.S. Bureau of Prisons (BOP) in Carswell, Texas, has agreed to pay the United States $50,000 to resolve allegations that he violated the Anti-Kickback Act by accepting improper payments from Mansfield, Texas-based Integrated Medical Solutions Inc. (IMS) in exchange for his assistance in obtaining BOP contracts.  In May 2017, IMS and its former president, Jerry Heftler, agreed to pay more than $2.4 million to resolve their civil liability arising from the alleged scheme.  

“This settlement demonstrates that the Department of Justice is committed to protecting the integrity of the federal contracting process from unscrupulous contractors,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “Improper financial arrangements between government officials and private contractors corrupt taxpayer-funded contracts.”

The settlement announced yesterday resolves allegations that Hudson, while serving as a BOP financial administrator, accepted payments from IMS in exchange for providing favorable treatment in connection with BOP contracts to manage healthcare networks that provided medical care to federal inmates.  Hudson’s assistance to IMS allegedly included the provision of certain confidential, non-public information that gave IMS an unfair competitive advantage in the bidding process.  The government also alleged that, after IMS obtained the contracts with BOP, Hudson improperly assisted IMS in its performance of the contracts while simultaneously serving as a BOP financial administrator.

“This case, in which our office both criminally prosecuted the responsible employee and civilly recovered almost $2.5 million for the federal fisc, should serve as an example and warning to others who might be similarly tempted to abuse positions of trust in federal programs funded with taxpayer dollars,” said U.S. Attorney Erin Nealy Cox of the Northern District of Texas.  

In October 2014, Hudson pleaded guilty to a felony violation of 18 U.S.C. § 1001 for failing to disclose the payments he received from IMS as part of his annual obligation as a federal government employee to report any potential conflicts of interests.   

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of Texas, with assistance from the Department of Justice Office of Inspector General.     

Except to the extent of the admissions in Hudson’s guilty plea, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability.